What I've done this week

Investment Analysis Clubs Saul’s Investing Discussions
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It’s a weird time to think about making money in the market. It doesn’t seem important – we should be focusing on the lives affected by this virus. But on the other hand, we need money to live. Also, it’s tough because we all know this isn’t the black plague. But on the other hand, we still need to take it seriously – more seriously than many of us realized at first. We’re all a little confused.

The market is confused too. The selling has been indiscriminate, and the indexes are in bear market territory. If you’ve been waiting for a buying opportunity, it’s here. But we’re not at the point we were at in 2016 where SHOP and PAYC were trading at PS ratios under 10. Alteryx is where it was in December. We have not melted down. And I don’t think we will melt down. Our companies are strong.

So what do we do?

  1. Realize where we are. Milk and honey aren’t flowing, as we’d gotten accustomed to, but our companies are strong and our stocks haven’t cratered.

  2. Cut the chaff. This week I sold SQ because I’d like to have some cash to buy other things at a bargain.

  3. Add incrementally. I’m glad I didn’t get over excited and dump all my money into Alteryx at $115 like I wanted to. But I have added this week. And now it’s below $100. I think I’ll go add a little more.

Good luck all. Moderation and patience go a long way when others are panicking.

Bear

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Hi Bear,

Yes I can’t believe I had the chance to add to my Alteryx at $91.70, and to Okta at $97.10 just 10 minutes ago, and they are now at $96.50 and $107.10 just 10 minutes later. Boy, if I could only compound a profit like that.

Saul

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Hi Bear,

Yes I can’t believe I had the chance to add to my Alteryx at $91.70, and to Okta at $97.10 just 10 minutes ago, and they are now at $96.50 and $107.10 just 10 minutes later. Boy, if I could only compound a profit like that.

Saul,

And this is what makes you a better investor than most.

Cheers
Qazulight

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Thank you, Bear. Cool heads will prevail. I don’t think we’re near bottom yet, but yes, the time to buy is here. Of our collection of stocks, I think ZM will do very well. Any product that helps people work remotely will be in high demand. I will be adding to my position.

Slack (WORK) is another collaborative-type stock that may benefit. I’ve seen very little regarding them and recent events, but it makes some sense to me that they aid the flow of information without the need to be face to face. I’ll be buying into this as well.

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Talk about luck, having originally brought AYX at $39.00 a few years ago, I decided to trim somewhat and at 9.35 ish put in a sell order except the second I hit the button I saw my mistake and had hit the buy button instead, this has only ever happened to me once before. Wasn’t filled and then automatic shut down! 15 minutes later it filled at around 92 and change… I then sold at $98.00 nearly an hour later…!!! Utter fluke and perhaps someone looking out for me as luck is not my strong point. Hopefully a few years down the road, all this will be irrelevant but needed funds to re-organize a bit.
Hang in there all…But most of all be safe and healthy for you and family as that counts more than the daily stuff we do here.

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Frankly, I’m disappointed you didn’t hit the absolute daily bottom perfectly.

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I grabbed AYX, ROKU, CRWD, and OKTA at +/- 20% off my average cost per share today. Yes, I’m aware there might be better times to buy but I’ll buy then as well.

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Like some, but hopefully not like most, I took small bites on the way down in search of the bottom yesterday for a number of my highest conviction stocks, utilizing my cash reserves…none of the purchases would be a surprise to this board.

Today, I was a bit pissed to find out that the market was continuing its clearance sale and had further mark downs on some of the most amazing brands. While initially disappointed in the fact that I did not get the best prices yesterday, I went back to the market today and stocked up on more of the same.

My dilemma now, as I contemplate more purchases, is whether to put “New” cash into the market on my next trip to the store to buy clearance brands or to sell off some lower conviction brands and use those proceeds.

Not sure how long this sale will continue, so I am working on this as I type.

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I wish I knew how to do charts on this board; but to expand on my previous post:

I made the following moves moments ago. I looked at my higher conviction stocks in the portfolio and then assessed not only how far they were currently off their associated 52-Week High, but also how far they had dropped in the past 30 days (i.e.; the Corona Bear). Based on that, I added to the following companies. After the Ticker is the percentage drop-off from the 52-Week High followed by the percentage drop in the past 30 days:

OKTA (-26.58% / -13%)

MDB (-41.49% / -22%)

AYX (-40.45% / -18%)

PAYC (-39.68%/ -21%)

COUP (-38.01% / -22%)

DDOG (-33.16% / -24%)

CRWD (-62.49% / -28%)

ROKU (-53.51% / -30%)

And, for a couple of my “moonshot” stocks that I am sure nobody on this board cares about, I also decided to take a “flyer” and add to:

INSG (-58.77% / -34%)

JMIA (-95.36% / -40%)

On a related note; rather than commit “New” money from my cash reserves into the market at this time, I decided to sell a few positions (you all know I have no lack of companies in my portfolio) that were modest winners that I really know nothing about in a market segment that I know even less about. I sold: Ecolabs, National Research Corp. and Guardant Health.

Again, my apologies for formatting.

Harley

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Hi all,

I don’t want to go off topic here, but I think it is important we be aware of the macro environment as it relates to our “Saul stocks”. I contend Saul stocks are not immune to COVID-19, and I think we must all be aware of where this is heading.

I would like to give you an outsiders perspective of the pandemic as it relates to the US economy. I don’t wish to offend, I am just making observations. The US appears to be poorly prepared for COVID-19, and is facing rapidly deteriorating conditions in the coming days and weeks.

Here are my observations:

  1. US is doing the least COVID-19 testing per capita in the first world. By a long long way.
  2. The majority of COVID-19 cases imported into Australia are from the US. Tom Hanks is an example of this. This indicate there is a big outbreak on the West coast, where most Aussies travel to.
  3. No universal heath care. Pandemic measures are only as good as your weakest link.
  4. COVID-19 reported cases in the US are growing exponentially, faster than Italy ever has. The highest mean weekly growth factor for Italy to date is 1.4 (this means the growth in new cases increased 2.5 times over 7 days). The highest growth factor for the US to date is 4.3 (I think this is also being held back by a lack of testing)
  5. Leadership - The president has downplayed COVID-19, which has helped it take hold in the US.

COVID-19 is spreading many times faster in the US than it did in Italy. At some point very soon, the US will be in total lock down in order to prevent the health care system being overwelmed. LET THAT SINK IN.

Our Saul stocks have very large S & M budgets. How will they effectively sell when they can’t meet anyone face-to-face for a period of time? I think S & M will be disrupted, and I contend we will see a slowing of revenue growth for at least 1-2 quarters in even our best companies.

I don’t know when COVID-19 will peak in the US, but I am fairly confident we are weeks and possibly months away from peak stock market carnage. You can see how the Italian, Korean, and Japanese stock markets as to what to expect. I note, Italy appears to have reached its inflection point due to the extreme measures in place, and the stock market appears to have stabilised (but it is early days).

I’ll be on the sidelines until COVID-19 pandemic in the US reaches an inflection point. I am monitoring this and will pull the trigger when this is reached. If I had to guess, that is 1-2 months away, but depends on the US response. Unfortunately, to get to that point will need extreme disruption as exemplified in what we see in Italy, Korea, and Japan.

Good luck all, look out for each other. Particularly the elderly and immuno-compromised.

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“Our Saul stocks have very large S & M budgets. How will they effectively sell when they can’t meet anyone face-to-face for a period of time? I think S & M will be disrupted, and I contend we will see a slowing of revenue growth for at least 1-2 quarters in even our best companies.”

Zoom! Zoom! My son works in IT in the Silicon Valley and that’s what his company is doing and at this point business is still good. Not to say it can’t get worse but eventually as with all pandemics(H1N1 lasted from early 2009 to late 2010 I believe)business should improve. I have been nibbling here and there in the good names that are discussed on this board and am looking 5+ years out so in my time line things should work out well. Who knows if this is close to the bottom but I think when it all shakes out these companies will make us money.

epm

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I was very happy to see seanralay’s post that highlighted the likely lengthy timeline for COVID-19 and possible long term impacts. I see too many posts where people are grabbing up our favorite high risk stocks because they look on sale. Take a deep breath. I remember when I did this in the HiTech meltdown in 2001-2002. And lost all the money I had made. I think we need to remind ourselves as investors we are managing time not just stock prices.

No I am not panicking with a rash of selling or buying. But I am stepping back and trying to figure which stocks will recover sooner than others. I am still pretty heavily invested and feeling pain. As things started getting cloudy a few weeks ago I started selling holdings that I felt would be most vulnerable if we met the bear: W, ZS, UI, ANET, XLNX. W because it was already on shaky ground with no cash flow. The other network stocks because an economic slowdown will mean a pullback in capital spending. And sold my ESTC for probably not a good reason…did not like their Endgame endpoint acquisition…now I do that I understand better. I held my AYX, TTD, SHOP, ROKU, MDB, and TWLO because I had profit cushions in these.

It is time to start looking at opportunistic buy targets as suggested in the MF Supernova post today. And then wade in on your strongest convictions. Remember the bear we see today may be the recession bites us tomorrow.

-zane

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